The University of Maryland has won 25 Big Ten Conference regular season and tournament athletic titles since joining the conference prior to the 2014-15 academic year. But while the Terrapins have performed well on the playing field, the university lags behind its conference peers in the size of its endowment.
At the end of the 2015 fiscal year, the last full year for which data was available, Maryland’s endowment of $509 million ranked last in the conference. Rutgers University was next with a $711 million endowment while the University of Michigan topped the conference with a $7.6 billion endowment.
Maryland’s flagship campus at College Park also draws some funds from the University System of Maryland’s endowment fund, but not remotely enough to close the gap.
“Having the lowest endowment in the Big Ten really puts us at a disadvantage,” said Brian Ullmann, until recently a spokesman for the University of Maryland. “A low endowment doesn’t give us the flexibility to fund programs, to attract faculty or chairs, and it puts us at a disadvantage.”
Maryland left its previous conference, the Atlantic Coast Conference, for the Big Ten, saying that the latter’s array of major research institutions, land-grant universities and big-time sports were a better match. At the time Maryland left the ACC for the Big Ten, six of the ACC’s 15 universities were private institutions.
In the Big Ten, which has fourteen schools, Maryland joined 12 other public universities and just one private university, Northwestern. Maryland also joined nine other public land-grant universities.
But when the university joined a culturally representative conference, it found itself behind in private investment money.
Strong state backing
Historically, the University of Maryland has received strong support from the state through the appropriations process.
For that reason, the university did not need to put a lot of effort into growing its endowment, said Sandy Baum, a senior fellow at the Urban Institute who studies public policy and higher education. Maryland could rely on state funds without having to seek out other revenue sources to subsidize costs.
In 2015, the University of Maryland received state appropriations equal to $13,800 per full-time enrolled student. The only school to receive more per student through state appropriations in 2015 was Rutgers University.
The University of Michigan, with the conference’s largest endowment, received the third-fewest amount of state appropriations per full-time student.
“There’s no question having more endowment funds gives you more flexibility,” Baum said. “But the same thing is true of state appropriations.”
But as states trend toward tightening their budgets, growing an endowment could be the best protection universities have, she said.
“We have been blessed with very consistent and strong support for our state university,” Ullmann said. “That has allowed us to keep tuition really low.”
But at the same time, the school has watched other Big Ten universities lose state appropriations.
How does an endowment work?
When a donor contributes money to the university in an endowed fund, the school does not have access to most of that money. Instead, the university invests the money and can use a percentage of the return, typically around 5 percent.
In some cases, money will just be donated to the school’s endowment fund and the university can use funds however it wants.
In other cases, a donor will limit the uses of the funds. The donation could be designated to only fund a department chair or a building, so the investment returns can only be used for that purpose.
Either way you look at it, Maryland has fallen behind its peers and wants to catch up.
The university will begin an aggressive capital campaign this year to raise funds for its endowment, said Ullmann, who retired shortly after being interviewed for this story. It aims to double the endowment to $1 billion.
With that money, the school wants to endow more faculty, more chairs, more programs and to provide some tuition assistance.
Catching up to some of the other schools would be nearly impossible; doubling the endowment will be challenging enough.
“I wish it was easy,” Ullmann said. “Most of the other schools have been doing it longer.”
He estimated that the university was about two full campaigns behind the other schools.
To bring the endowment up, the school has to educate its alumni and other backers about the importance of contributing to an endowment over the current year giving. That education has also extended to the university’s staff.
“We needed to improve the level of understanding about endowment,” he said. “And we need to do that all the time.”
The University of Maryland’s stature has risen over the past couple of decades. In the most recent U.S. News and World Report college rankings, the school ranked as a top 20 public university.
“I think we have had over the past 20 years a pretty rapid ascent in terms of the academic and research of our university,” Ullmann said. “All of a sudden people are realizing, ‘Holy s–t, Maryland is one of the premier universities in the country.’”
But the school needs to grow its endowment like a top 20 school.
“I would say growing the endowment is important to the future of our university,” he said. “Growing a university endowment is not going to happen overnight, but university leadership and volunteers are committed to doing it because we all recognize that … it is essential to our university.”